TMI Blog2019 (5) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... hen revenue could not produce any positive evidence about the procurement of said FFS machines in the month of December, 2013 and January, 2014. Further, revenue did not find a single pouch of the finished goods in the market as per available record. Further, Revenue did not establish that the electric connection required for four FFS Machines was available with Shri Srikant Chaurasia since January, 2014 and he had paid electricity bill required for manufacture of goods involving duty of around ₹ 9 crores. We therefore, come to a conclusion that the impugned order is not sustainable. Appeal allowed - decided in favor of appellant. - Excise Appeal Nos. 70139 of 2019 And 71250, 71210, 71211, 71251 of 2018-EX[DB] - Final Order Nos. 71016-71020/2019 - Dated:- 21-5-2019 - SMT. ARCHANA WADHWA, MEMBER (JUDICIAL) And MR. ANIL G. SHAKKARWAR, MEMBER(TECHNICAL) Smt Sudarshan Srivastava, Advocate, Shri Kamlesh Singh, Advocate And Shri Anant Vijay, Advocate for the Appellants Shri Gyanendra Kumar Tripathi Shri Shiv Pratap Singh, Authorised Representatives for the Respondent ORDER PER: ANIL G. SHAKKARWAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further carried out the investigations and sought opinion on packed chewing tobacco from Shri Krishna Kumar Jaiswal and M/s India Trading Company who vide their opinion dated 13.09.2014 stated that the product was scented chewing tobacco and value could be 50 paisa per pouch or less. The representative of Shri Srikant Chaurasia on 05.01.2015 appeared before the officers of Central Excise and submitted a letter dated 05.01.2015 along with the said letter copies of invoices evidencing the purchase of 4 FFS machines from Kanpur, papers of their transportation, sales copy of the bill showing purchase of raw tobacco, laminated paper rolls and BOPP were produced. The details of the document produced before the Central Excise officers are as follows:- i) Photocopy of Invoice No.1 dated 07.09.2014 issued from Book No.1 of M/s Ambey Engineering, Kanpur regarding sale of 02 pouch packing machines (old) in total valued at ₹ 21,660/- and GR no.24130 dated 07.09.2014 of M/s Saran Roadways Company, Kanpur evidencing their transportation to Sri Srikant Chaurasia on freight of ₹ 650/-, as well as receipt no.34963 dated 10.09.2014 evidencing its delivery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with Form 9 bearing Sl. No.129988 of Krishi Utpadan Mandi Samiti, Varanasi. viii) Photocopy of sale invoice no.0315 dated 08.09.2014 of M/s R.M. Poly pack Pvt. Ltd., Ganeshpur, Tarna, Shivpur, Varanasi regarding sale of 239.500 Kg of Plain Coloured laminated paper rolls to Shri Srikant Chaurasia, Churamanpur, Varanasi. ix) Photocopy of sale invoice no.245 dated 09.09.2014 of M/s Varanasi Packaging, Bhelupur, Varanasi regarding sale of 200 Kg of BOPP Film bags to Sri Srikant Chaurasia, Churamanpur, Varanasi. 3. Further, investigations were carried out with M/s Anmol Pakaging, Kanpur, M/s Ambey Engineering, Kanpur, M/s Saran Roadways Company situated at Piplani, Katra, Varanasi. M/s Naveen Tobacco Company Varanasi, M/s Varanasi Packaging, Varanasi, M/s R.M. Poly Pack Pvt. Ltd. Varanasi, and statements of relevant persons associated with the said Business concerns were recorded. On the basis of said investigations, show cause notice dated 15.07.2016 issued to all the appellant. Through the said show cause notice by invoking the extended period of limitation, Shri Srikant Chaurasia was called upon to show cause as to why Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of unbranded chewing tobacco, also appears to be an afterthought. On the basis of above it appears that the 04 FFS machines installed at aforesaid premises were used for clandestine manufacture and clearance of unbranded chewing tobacco by the party, in the unregistered premises at Churamanpur even prior to Dec, 2014. It appears that the party has failed to produce any evidence to prove that the machines were not in operation at churamanpur, prior to Dec, 2014. It appears that the party has failed to produce any evidence to prove that the machines were not in operation at Churamanpur, prior to Dec, 2014. Thus, in terms of provisions of rule 18 (2) of the CTUTPM Rules, all the four FFS machines are liable to be treated as deemed to be in operation since 1st April of financial year i.e. from April, 2013. 4. Further, the price of each pouch was taken to be ₹ 1.00 per pouch on the basis of market survey as reflected in para 35 of the said show cause notice. Under para 38 of said show cause notice duty payable under the said 2010 Rules was calculated to be ₹ 9,13,97,000/-. All the appellants filed their independent replies to the said show cause notice. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch accordingly he was reaching to the spon on his scooty and was met with an road accident. He was not well mentally as well as physically and was threatened by the officers and facts were recorded in his handwriting. He was not given opportunity to put forth his case and documents whereas orally he stated all the facts related to machines but the same were ignored by the officers on the ground that the documents presented by him were fabricated and the search was conducted for two continuous days. 55.5 that in order to protect himself from detention, he filed writ application before the Hon ble Supreme Court case no.174/2014 Srikant Chaurasia Vs Union of India wherein the Hon ble Court ordered for prevention of all the activities of harassment and ordered him to assist in investigation. 55.6 that the search team by pressure got recorded statements of his, as well as of Shri Dinesh Ttiwari s/o lt. Vishwanath Tiwari, Sh. Yadvendra Singh s/o harishankar Singh, Shri Shivkumar s/o Shri Bhaoyaa Lal, Sh. Mithilesh Kuma S/o Sh. Ramsahai, Sh. Alok Sharma s/o Shreekant, Ravish Kumar s/o Shri Basdebram, Vishal Sahni s/o Ramkishan Sahni (copy of all these statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the appellant on the ground of entry of delivery register is against the law. b. That the allegation of connivance with the party whose goods has been transported is absolutely baseless, based on assumption and presumption. Which is against the law in the case of J.A. Naidu Vs State of Maharashtra 1983 (13) ELT 161 (SC) Hon ble Court pleased to held that suspicion however grave cannot place of proof. c. That the allegation of attempt to fabricate documents and confuse the departmental investigation is also without any basis. The documents of transportation during the investigation has been found correct and no act of fabrication of documents by oral and documentary is proved by the department therefore imposition of penalty is illegal in the case of Hindustan Steel Ltd. Vs State of Orissa AIR 1970 (SC) 253, AIR 1984 (SC) 1194 Hon ble Court was pleased to hold that the discretion to imposed penalty must be exercised judicially. Penalty will ordinarily be imposed in a case where the party acts deliberately in defiance of law. In the case of the appellant machines were transported from Kanpur to Varanasi by the appellants firm in common business of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.3 We have heard Smt. Sudarshan Srivastava learned Advocate on behalf of M/s Anmol Packaging. She has submitted as follows:- a. That the appellant in his reply to show cause notice admitted the sale transaction to Shri Srikant Chaurasia and on demand issued sale certificate and affidavit with regard to sale, installation and trial of two machines but on 13/01/2016 during third statement by force it was got recorded that trial and installation was not done by the firm which can t be treated voluntarily given statement. b. The ground taken by the revenue that the appellant in his statement dated 13/01/2016 the appellant has admitted that his firm has not installed the machine. The appellant in his reply to show cause notice retracted from the statement dated 13/01/2016 saying that it was recorded forceivly, under pressure and inflicting undue influence upon the appellant hence not reliable. The adjudicating authority did not record any finding on the reply of the appellant and accepted the case of revenue ignoring documentary and oral record. c. That the charge of evading of central excise duty in collusion with purchaser Shrikant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted as follows:- a. That all the machines were received by the appellant in his under-construction house situated at 328 Ka, Churamanpur (Near Jansewa Hospital), Varanasi on 04.09.2014 (purchased on 02.09.2014), 07.09.2014 (purchased on 04.09.2014) and 10.09.2014 (purchased on 07.09.2014) respectively through the transporter Saran Roadways Co. b. That the mechanics send by the both machines seller for installation of machines on 10.09.2014 and machines were installed and took trail on 11.09.2014. For trail run there was a need of some raw materials demanded by the mechanic. c. That for fulfillment of need of raw material for the trial run the appellant purchased raw tobacco from M/s Naveen tobacco Co. on 11.09.2014 of ₹ 20,640/-, the appellant purchased color laminated roles from R.M. Polypack Pvt. Ltd. on 08.09.2014 on credit. The appellant purchased BOPP film bag from Varanasi packaging shop on 09.09.2014 of ₹ 33,600/- d. That the appellant was about to ready to intimate the department on 12.09.2014 for starting four pouch packing machines under rule 6 (10) of CTUTPM, 2010. But unfortunately the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses in adjudication, their statements cannot be considered as evidence. However, if the Revenue choose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross-examination for the evidence or statement to be considered. h. Accordingly to said ruling the adjudicating authority is not liable to rely on statements of witnesses whose opportunity of cross-examination was not given to the appellant. i. That the original authority relied on the statements given at the time of seizure on 12.09.2014 and all the statements which were recorded on 12.09.2014 were subsequently retracted. Therefore, the statements recorded on 12.09.2014 are not a piece of evidence to rely upon. j. That the original authority is solely relying on statements which were subsequently retracted. Inspite of that there is no documentary evidence whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale, statements of buyers, proof of transportation of final product etc. was produced by the department. n) That Revenue was not brought any evidence to prove any of the points stated above to prove clandestine manufacture clearance, since the entire demand of excise duty is not sustainable on merit the appellant is not liable to pay penalties under section 11AC of CEA, 1944. Personal penalties on other appellants are also not sustainable. 7. We have Heard Shri Gyanendra Kumar Tripathi and Shri Shiv Pratrap Singh, learned Deputy Commissioners on behalf of revenue. They have reiterated the findings of the Original Adjudicating Authority. 8. We have carefully considered the submissions of all the appellants, submissions made by Departmental Representatives and we have perused the records. On perusal of impugned Order-in-Original, we note that the Original Adjudicating Authority did not allow the cross examination of any of the whiteness, whose statements were relied upon for issue of show cause notice. We note that Original Authority has relied upon statements recoded on 12.09.2014 which is date the search was conducted in the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise, Ahmedabad-II reported at 2014(311) ELT 529 (Tri.-All.) that clandestine removal by a manufacturer needs to be established by collecting evidence in relation of procurement of raw materials, actual removal of unaccounted finished goods, discovery of such goods outside the factory, instances of sale of such goods to identified parties, receipts of sale proceeds of such goods by the manufacturer, use of electricity which is necessary for manufacture of goods otherwise manufactured and cleared on payment of duty, statement of buyers with some details and illicit manufacture and clearance, proof of actual transportation of goods cleared without payment of duty. We note that revenue could not make out a case bringing no evidences as required for establishment of clandestine clearance as held in the above stated case of Arya Fiber Pvt. Ltd. Further, we note that the Original Authority has refused to accept the invoices issued by M/s Anmol Packaging and M/s Ambey Engineering even when revenue could not produce any positive evidence about the procurement of said FFS machines in the month of December, 2013 and January, 2014. Further, revenue did not find a single pouch of the finished g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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